Documentation / Formalities Government registration / civil processing of employment documentation? Probationary periods allowed? Yes (up to six months). Do non-nationals require work / resident permit? EEA nationals no. Non-EEA nationals - yes. EEA nationals no. Non-EEA nationals - yes. EEA nationals - no. Non-EEA nationals - yes. EEA nationals - no. Non-EEA nationals - yes. Yes (for employment contracts over six months). EEA and Swiss nationals - no. Non-EEA and non- Swiss nationals - yes. No except in certain specific contracts (eg temporary agency workers and student workers). EEA nationals and Swiss nationals - no. Non-EEA nationals - yes. Yes (up to six months). EEA nationals - no. Non-EEA nationals - yes. Employee Representation Are companies No, subject to obliged to have a number of national works employees and council or other receiving written types of employee request. representatives? Employee representation at board level? Yes, if certain thresholds met. Yes, if more than 1000 employees in France, or 5000 in France and abroad. No, subject to eligible employees exercising their right. Yes, depending on legal structure of company and number of employees. Yes, if certain thresholds met. Yes, if certain thresholds met. No, subject to number of employees and employees exercising their right. Family Leave Rights Maximum length of 52 weeks. 16 weeks. Six weeks before 16 weeks. Six weeks 15 weeks (19 Two months 1
pregnancy leave weeks if multiple and 10 weeks births). maternity leave (or a maximum of 20 weeks pregnancy and maternity leave if multiple births). maternity leave? giving birth, 8-12 weeks after birth. Upon presentation of a sickness certificate the mother has to be released from the obligation to work earlier. Maximum length of parental leave? Obligation to provide paid maternity, paternity, adoption leave? Working Time Statutory annual leave entitlement. 18 weeks (to be taken before child is 18). One year (renewable until child is three). Up to three years (until child is three). A period of up to 12 months (24 months for births after 30 June 2015) can be transferred to the period between the fourth year and the eighth year (until child is eight). Maternity leave yes. Parental leave - no. 28 days paid. 25 days paid (plus bank holidays). Four weeks paid (plus bank holidays). 13 days. Up to 26 times the number of contractual working hours per week for every child (up to 8 years old). Maternity leave - yes. 30 days paid (plus bank holidays). CBA may establish more days. Up to four months before child is 12. Maternity leave yes. Paternity leave yes. 20 days paid (plus bank holidays). 20 days paid (plus bank holidays). before birth, up to three months after birth. 11 months (for mother and father combined) until child is 12. 20 days paid (plus bank holidays). Max working week. 48 hour working 48 hour working week. 48 hour working Maximum of 40 Maximum 12 hours 40 hours per week, 40 hours per week. 2
week. week. Right to opt out. Maximum of 44 hours on average in any 12 weeks (depending on collective bargaining agreements and collective agreements). No right to opt out. However, possibility to opt out with the authorisation of the labour inspector in case of exceptional circumstances for a limited time period and within an absolute limit of 60 hours per week. No right to opt out. However, temporary increase to 60 hours per week possible provided an average working time of 48 hours is not exceeded in 6 months. effective hours per week as an annual average. No right to opt out. Subject to overall maximum, working hours can be varied during the year. Overtime allowed but capped. per shift, 60 hours per week and 48 hours on average in any period of 16 consecutive weeks. No right to opt out and maximum hours no more than average of 55 hours per week over four weeks. (Unless the employee earns three times the minimum wage per year). but reduction to an average of 38 hours per week over a reference period of three months to one year. Reduction happens by awarding 12 working time reduction days per year. No right to opt out. Average length of working time must not exceed 48 hours for any period of seven days. No right to opt out. Compensation and Benefits Obligation to provide sick pay? Statutory sick pay (SSP) (which can be recovered) may be available to qualifying employees. Yes, from Social Security Administration, often supplemented by employer to maintain all or part of employee s normal salary. Employer continues to pay employee s remuneration for up to six weeks (per period of sickness). Employer covers first three days of illness. Social Security covers a percentage of employee s base salary from day four onwards. Some CBAs foresee a supplement so that employees receive 100% salary. Employer pays at least 70% of the employee s salary (capped at 4,397.20 gross per month) for 104 weeks and for the first 52 weeks the employer is obliged to pay at least the statutory minimum wage. White collar employees on contracts for an indefinite term or for a fixed-term contract longer than three months are entitled to paid leave for first 30 days of illness. Specific rules apply to blue collar workers and to Yes, for an amount subject to applicable national CBA. 3
white collar employees on a fixed-term contract shorter than three months. Termination of employment Are there legal limits on the Must be for one of circumstances in five potentially fair which an employee reasons (conduct, can be dismissed? capability / qualifications, redundancy, statutory duty / restriction preventing continuation of employment, some other substantial reason) Fair process must be followed. Protected categories Dismissal unlawful if on grounds of gender, race, age, Must be justified by a real and serious causeeither a personal ground, or economic ground and comply with specific dismissal procedure. Dismissal unlawful if employee is pregnant, a whistle-blower or an Where more than 10 full-time employees are employed (or the equivalent part time employees) must be justified by urgent operational, conduct related or personal reasons. Notice cannot be given to pregnant employees, those Must be justified by a real and serious cause - either a disciplinary ground or an economic (redundancy) ground and comply with specific dismissal procedures. Cannot be dismissed (unless objective and fair The employer must obtain prior approval from the governmental body, the UWV, to give notice, request the court to dissolve the employment or enter into a settlement agreement. Whether the employer should go to the court or to the UWV will depend on the grounds for dismissal. An employee can only be dismissed on statutory grounds. Cannot be dismissed if protected ground Fixed term contracts cannot in principle be terminated unless indemnity equal to remaining remuneration is paid, subject to exceptions. Protection against dismissal for employee Must be justified by economic or disciplinary reasons. Dismissal unlawful if on grounds of gender, race, age, 4
Service required for dismissal claim? Time limit for claim disability, sexual orientation, pregnancy, marital / civil partnership status or religion / belief. employee representative. Two years service (unless on protected ground). Within three months of termination. 12 months to bring mass redundancy claim. Two years for dismissal on other grounds. on maternity, paternity or parental leave until leave expires, unless exceptional circumstances and prior permission. Severely disabled employees can only be dismissed with prior permission. Works council members, candidates and election committee members during elections cannot be dismissed. Data protection officers enjoy special protection as well. However dismissal protection, if applicable, will only come into force after six months service. Within three weeks of notice (not termination). grounds exist) if employee is pregnant or on maternity or paternity leave (up to nine months following childbirth), or if employee has reduced working hours for childcare, if the employee is a representative or is unionised or when employees raise claims against the company. (Once probationary period has elapsed.) Within 20 working days following the effective date of termination. applies to the employee, ie first two years of sick leave, pregnant, on military service, works council members, candidates during elections, data protection officers, disabled. representatives in a wide range of circumstances including candidates at social elections, trade union delegates, pregnant employees, employees on maternity, paternity, parental, adoption leave or breast feeding employees. Within two months of termination. Within one year of termination. disability, sexual orientation, pregnancy, marital / civil partnership status or religion / belief. Female employees cannot be dismissed within one year after marriage or from the first day of pregnancy until their child is one year old, save for cause. Action within 60 days of dismissal and claim filed in Court within following 180 days. 5
Statutory cap on compensation? Statutory notice periods? Statutory severance costs? Capped at the lower of (approx.) 85,000, or 52 weeks pay. Whistle-blowing claims uncapped. Minimum six months salary if at least two years service. Damages no. Unfair dismissal - when service continues up to 12 February 2012 45 days total compensation per years of service (max 42 months salary). Service from 12 February 2012 onwards 33 days total compensation per years of service (max 24 month s salary). When there is a combination of both, cap is severance accrued up to 12 February 2012 and in any event, capped at 3.5 years. In principle only employees with at least two years service receive compensation after dismissal in the form of a transition budget payable by the employer, unless the dismissal is for serious misconduct. The transitional payment is capped at a maximum of 76,000 gross or one year s salary if this is more than 76,000 gross. Other compensation that can be awarded by a court, such as the reasonable compensation (billijke vergoeding) is not capped. No, subject to negotiation. No, except in cases of closure indemnity, collective dismissal or discriminatory Employees employed prior to 07 March 2015: 12 to 24 months salary or, in certain cases, reinstatement or 15 months salary in lieu thereof at the choice of the employee. Employees employed after 07 March 2015: two months salary per year of service, with a minimum of four and a maximum of 24 or, in certain cases, reinstatement or 15 months salary in lieu thereof at the choice of the employee. 6
Specific procedures to follow when dismissing an employee? Is selection criteria for redundancy statutorily prescribed? Discrimination Protection against discrimination? Remedies dismissal. No, unless specified Yes, to make the by contract of employee serve employment. the statutory Must be reasonable. notice period. No, if terminating with immediate effect and payment of compensation in lieu. Contract of employment or certain collective labour agreements could specify a specific process. Based on age, length of service, number of dependants and disability Based on age, length of service, number of dependants and severe disability (or equivalent status). Yes, for collective redundancy (general criteria). No for individual termination, but in the event of redundancy, organisational ground must be clearly explained. Based on position, specific age brackets and length of service. Uncapped compensation. Uncapped compensation. Compensation for loss of earnings Compensation capped at 45/33 Uncapped Compensation. Order declaring discriminatory Only for collective redundancies. Uncapped compensation 7
Time limit to bring claim Protection for whistle-blowers? Reinstatement and Reinstatement. and injury to days salary per Reinstatement and provision null and Reinstatement or re-engagement feelings (generally year of service for re-engagement void. 15 months salary (rare). low). constructive (rare). Compensation. in lieu. Compensation for dismissal. Order to stop immaterial Additional discriminatory damage, capped at compensation or conduct three months damages. salary in event of Plan to prevent non-recruitment. repetition. Court decision published in newspaper. Three months. Five years Two months to raise a claim and three months to initiate court proceedings. No, not in addition to dismissal protection. One year. If constructive dismissal is due to a substantial change in working conditions, 20 working days. No, not in addition to dismissal protection. Five years following when damage is apparent to bring claim. One year, five years or 10 years depending on exact circumstances. Five years or, in case of discriminatory dismissal, within 60 days of dismissal and claim filed in Court within following 180 days. No, not in addition to dismissal protection. Compensation Uncapped. Uncapped. As above. As above. Uncapped. Lump sum compensation equivalent to three or six months gross remuneration (depending on circumstances) or actual damage if higher. Certain As above. 8
discriminatory measures can be undone by means of nullifying them. In such case, the employee s lump sum compensation is set at 650 or 1,300 (depending on the circumstances). Business Protection Confidentiality obligations implied by law? Garden leave permissible? Are posttermination restraints enforceable? Payment in relation to post-termination restraints required? Possibly (depends on contract and balancing legitimate interests). Yes, subject to conditions. Yes, subject to conditions. Yes, subject to conditions. Yes, but must be mutually agreed or employee can raise constructive dismissal (due to lack of workload). Yes, subject to conditions. Yes (with employee s agreement). Yes, subject to conditions. Yes, subject to conditions. Yes, subject to conditions. 9
Employment tax Tax year runs from 06 April to 05 April. Income tax rates are: (i) 20% on income between 11,001 and 43,000 per annum (ii) 40% between 43,001 and 150,000 (iii) 45% over 150,000 National Insurance Contribution: (i) employer - 13.8% (ii) employee - 12% on income between 8,604.11 and 42,996 per annum and 3% above that. It is expected that from 2018 National Tax year runs from 01 January to 31 December. Income tax rates (applicable for tax year 2015 last available at this date) are: For individuals: (i) 0% on annual until 9,699 (ii) 14% on annual from 9,700 to 26,791 (iii) 30% on annual from 26,792 to 71,826 (iv) 41% on annual from 71,827 to 152,108 (v) 45% on annual above 152,108 (as from 152,109). For married couples: (i) 0% on annual until 19,398 Tax year runs from 01 January to 31 December. Income tax For individuals: (i) 14%-24% on annual 8,652 to 13,669 (ii) 24%-41% on annual 13,670 to 53,665 (iii) 42% up to 254,446 (iv) 45% above that. For married couples: (i) 14%-24% on annual 17,304 to 27,445 (ii) 24%-41 on 27,450 to 107,330 (iii) 42% up to 508,892 (iiii) 45% above Tax year runs from 01 January to 31 December. Income tax (Madrid): (i) 19% on annual income up to 12,450 (ii) 24% up to 20,200 (iii) 30% up to 35,200 (iv) 37% up to 60,000 (v) 45% on anything above 60,000. Where certain conditions are met, employees may benefit from other special regimes. Where an employee is considered to be an expatriate (ie has not been a resident for tax purposes for 10 years before Tax year runs from 01 January to 31 December. Income tax rates are: (i) 8.4% on first 19,922 (ii) 12.25% between 19,922 and 33,715 (iii) 40.40% between 33,715 and 66,421 (iv) 52% above 66,421. National Insurance premiums (premiums social security): 28.15% of income (maximum of 9,490). Redundancy/ex gratia termination payments: Payments are fully and no exemptions apply. Upon termination of employment a The tax year runs from 01 January to 31 December. Income tax rates are: For individuals: (i) 25% on annual income up to 10,860 (ii) 30% on annual 10,860 to 12.470 (iii) 40% on annual 12.470 to 20.780 (iv) 45% on annual 10,780 to 38,080 (v) 50% above that. However, a certain amount of annual income is exempted from taxes: 7,130 (minimum) and for Tax year runs from 01 January to 31 December. Income tax rates are: For individuals: (i) 23% up to annual income of 15,000 (ii) 27% on annual 15,000 to 28,000 (iii) 38% on annual 28,000 to 55,000 (iv) 41% on annual 55,000 to 75,000 (v) 43% above that. A number of reductions from the gross personal tax are provided by the law (such as tax credit for 10
Insurance Contributions will be applied to all (ii) 14% on annual from 19,399 to 53,582 termination (iii) 30% on annual payments exceeding from 53,583 to 143,65 30,000. (iv) 41% on annual Termination/ex gratia payments: from 143,653 to first 30,000 is free 304,216 from tax and National Insurance (v) 45% on annual Contributions. Income tax will be above 304,216 payable on the (as from remainder (but not 304,217). National Insurance Contributions). Please note that there is an exceptional contribution on high income of: (i) (ii) 3% if the annual is greater than 250,000 for a single individual / 500,000 for a married couple 4% if the annual is greater than 500,000 for a single individual / 1,000,000 for a that. Solidarity surcharge of 5.5% of total income tax is payable by the employee. Social security contribution rates: approximately 21% of employee s gross salary up to applicable social security contribution ceiling. Social security contributions are capped at approximately 1,087.70 per month for the employee and the employer separately, ie a total of approximately 2,174 per month. Termination/ex gratia payments: Some complicated tax advantages, but no equivalent of the 30,000 moving to Spain, can benefit from a flat rate of 24% on the first 600,000 of annual income for a maximum period of six years. RGSS contribution: employer approx. 35% of total compensation employee 6.35% of total compensation. (Salary is capped at 3,642 per month for year 2016 - for these purposes). Termination/ex gratia payments: the first 180,000 of mandatory termination payments are free of tax and RGSS contributions. However, income tax is payable on the remainder, and on all of the ex gratia termination final levy of 75% may be payable by the employer if the employee receives what is considered to be an excessive severance payment (under the Dutch Wage tax Act). This is calculated by benchmarking an employee s total compensation in the financial year two years prior to the year of termination against the following two years. If the severance package exceeds the employee s annual income in the benchmark year, it will be deemed excessive. No final levy will be due if the annual income in the benchmark year did not exceed 538K (2016). Social insurance each child ( 1,520 for the first child, 3,900 for the second child, 8,740 for the third child ). In addition, municipality or regional taxes are due on the amount of taxes (from 0% to around 10%). Employee social security contribution rates: approximately 13% of employee s gross salary. Taxation on termination amounts: no exemptions. Taxation on specific advantages (car, meal vouchers, allowances): specific regime is applicable. Specific tax regime for stock options. family dependants, tax reductions for employment incomes, life insurance premiums, medical and surgical expenses etc) Social security contribution rates: approximately 37%-38% of employee s gross salary for nonexecutive employees and 45% for executives. Social security contributions are calculated on a capped gross salary of approximately 100,000 per year (for employees enrolled in the social security system after 1996), and are borne approximately 9% by the employee and the rest by the employer. Termination/ex gratia 11
married couple. exemption in the payments (ie Social security UK. voluntary or top up contributions: payments made by approximately 23% of the employer). employee s gross salary, approximately 45% for the employer. Termination payments: There are some complicated tax and social exemptions, but no equivalent of the 30,000 exemption in the UK. payments: If the employee is covered by the Dutch social insurance system the employer will be required to pay a contribution under the Health Care Act (6.75%) based on the income of the employee (up to maximum income of 52,763) employee insurance premiums, equating to varying percentages of employee income (capped at 52,763), namely: Unemployment contribution (2.44%), Unemployment contribution per sector (based on the percentage applicable for financial services III sector, 2.05%), Disability insurance (6.38%) and the premium Return to payments: lower income tax rate, depending on employee s salary, and exemption from social security contributions. 12
Immigration for non-eea Nationals Work Fund (differs per employer). Foreign employees assigned to the Netherlands may benefit from a tax exemption of 30% of their gross salary as a tax-free cost allowance, on the assumption that 30 % of their income will be classified as extraterritorial expenses. The law does not require that a specific percentage of UK/EEA nationals are employed. Options most commonly used are Tier 2 (General) and Intra-Company Transfer (ICT) licences. Residence and work permits required depending on nationality. Residence and work permits required. Skilled workers and nationals of some countries (eg USA, Israel and Japan) will benefit from favourable immigration treatment and fast-track procedures. A range of licences can be issued by employers, eg highly qualified professionals and ICT licences. Each licence has its own specific requirements. Work permits are granted where employer can prove that it cannot fill the vacancy with an equally suitable national from an EU/EEA country/switzerland (this is only applicable when the employer applies for a single permit / GVVA). Other licences available include a work permit for an: Residence and work permits required. Certain skilled workers can be exempt from this. Residence and work permits required. intra company 13
transfer practitioner with a residence permit for learning on the job Highly Skilled Migrant (this procedure is an accelerated procedure for obtaining both work and residence for highly skilled non- EU/EEA/Swiss nationals). elexica.com is the award winning online legal resource of Simmons & Simmons Simmons & Simmons LLP 2016. All rights reserved, and all moral rights are asserted and reserved. This document is for general guidance only. It does not contain definitive advice. SIMMONS & SIMMONS and S&S are registered trade marks of Simmons & Simmons LLP. Simmons & Simmons is an international legal practice carried on by Simmons & Simmons LLP and its affiliated practices. Accordingly, references to Simmons & Simmons mean Simmons & Simmons LLP and the other partnerships and other entities or practices authorised to use the name Simmons & Simmons or one or more of those practices as the context requires. The word partner refers to a member of Simmons & Simmons LLP or an employee or consultant with equivalent standing and qualifications or to an individual with equivalent status in one of Simmons & Simmons LLP s affiliated practices. For further information on the international entities and practices, refer to simmons-simmons.com/legalresp Simmons & Simmons LLP is a limited liability partnership registered in England & Wales with number OC352713 and with its registered office at CityPoint, One Ropemaker Street, London EC2Y 9SS. It is authorised and regulated by the Solicitors Regulation Authority. A list of members and other partners together with their professional qualifications is available for inspection at the above address. B_LIVE_EMEA1:4142728v1 14